One of the biggest inquiries ever conducted into a complaint against police has confirmed Guardian reports of chaotic management and law-breaking in the relationship between London detectives and Jamaican Yardie gangsters who were working as police informers.

The 20-month inquiry, led by the chief constable of Hampshire, Sir John Hoddinott, is understood to have found that detectives broke the law when they allowed two violent Yardies to stay in England as an intelligence tool.

However, the Director of Public Prosecutions is expected to rule that no officer should be prosecuted on the grounds that too much time has passed since the offence was committed.

Police chiefs nationally have rewritten the rulebook for the handling of police informers in the light of Sir John's findings, and the Home Office is being asked to change immigration law, which allows foreign criminals with highly dangerous track records to be released into the community while their applications to stay in the country are considered.

The inquiry followed detailed reports by the Guardian with Granada TV's World In Action, about the activities of two Yardies, Eaton Green and Delroy Denton, who committed a series of violent crimes in London while working as informers for the Metropolitan police. Sir John's report is said to have found that the reports were 95 per cent accurate.

Eaton Green jumped bail in Jamaica in February 1991 and settled in Brixton, south London, where he became involved in dealing crack cocaine.

Three months later, when he was arrested by a Brixton constable, Steve Barker, he agreed to become a paid informer. Over the next two years, he provided Barker with a stream of high-grade intelligence about other Yardies involved in a spree of murder and drug-dealing in London.

Sir John's inquiry confirmed the Guardian's allegation that during this time Green himself continued to use firearms and to deal in crack. Barker and his senior officers failed to ask themselves whether it was right to keep such an active and destructive criminal on their payroll.

This was part of a wider management failure in the Metropolitan police to deal with the arrival of the Yardies in London. The result, Sir John confirms, is that junior officers like Steve Barker were left to devise their own tactics without the necessary supervision and control.

In March 1993 two Yardies, Rohan 'Bumpy' Thomas and Cecil Thomas (no relation), entered England unlawfully. Bumpy Thomas was a particularly dangerous man with a history of attacks on police officers. Sir John is understood to have confirmed that Steve Barker knew in advance they were to enter the country illegally.

Barker is said to have hoped to use the two men as 'a magnet for intelligence'. In the event he failed to monitor their movements closely, and they joined the Yardie crime spree in England. Three months later, Bumpy attempted to murder a detective in Stoke Newington. Sir John's report notes that Barker's involvement in their unlawful arrival was an offence under section 25 of the 1971 Immigration Act, but that the offence is now 'time spent' since the act requires that proceedings begin within 12 months.

Eaton Green's dual life as informer and criminal finally fell apart on May 30 1993 when he and four other Yardies, including Bumpy and Cecil Thomas, robbed 150 people at gunpoint in a blues party in Nottingham.

Sir John found that the 'management vacuum' at Scotland Yard meant that no senior officer contacted Nottinghamshire police to warn them that Green was one of their registered informers; no senior officer talked to the Crown Prosecution Service (CPS) about how Green's informing should be handled at the subsequent trial; Steve Barker failed to follow the necessary procedures. The result was that Green's role as an informer was revealed in open court; the trial was abandoned and then resumed with Green as a Crown witness; and Nottinghamshire police, the CPS and the trial judge all complained they had been misled by Scotland Yard.

Even though senior officers at Scotland Yard are credited by Sir John with trying to take a grip on the chaos, more trouble followed. Green was jailed for six years for his part in the Nottingham hold-up and then made a long confession to London detectives of his life of crime in Jamaica and London.

This wholly contradicted evidence he had given on oath at the trial of his fellow robbers. Sir John found that this confession should have been passed to the CPS so it could be disclosed to the Yardies' solicitors. In the event, the decision to hand it over was finally made five months later - on the day the Guardian disclosed the existence of the confession. The Court of Appeal subsequently quashed the convictions which had been obtained against the Yardies on the basis of Green's evidence.

In the case of Delroy Denton, Sir John confirms that in May 1994 Steve Barker and a specialist immigration officer, Brian Fotheringham, discovered that Denton had entered the country illegally, persuaded him to become an informer and then released him into the community while the authorities considered his application for political asylum. Denton had a history of extreme violence in Jamaica including the use of an ice-pick to murder a prostitute. In the 11 months following his release. Denton was accused of raping a 15-year-old schoolgirl in south London and then jailed for life for raping and murdering Marcia Lawes, a 24-year-old mother of two in Brixton.

However, they were said to be 'appalled' to discover that, regardless of the facts, the most senior immigration authorities regarded it as normal and lawful that a dangerous foreign criminal should be allowed to settle in the country while his case for admission was considered. Sir John's investigators found that as long as criminals honoured their bail conditions and used a fixed address, immigration authorities would not detain them. Sir John is understood to have included in his report a strongly worded recommendation that the Home Office act urgently to close this loophole. .

In 1994 Denton was jailed for life for rape and murder. Sir John's report is understood to conclude that the two decisions to release Denton were legitimate in the light of the evidence available; and again to criticise Scotland Yard for failing to ask whether it was right to keep such a man on its payroll.

If, as expected, the DPP decides that no officer should be prosecuted, Scotland Yard is expected to consider disciplinary charges against Steve Barker and other junior officers.

1/4 The immigration service brought six disciplinary charges against Brian Fotheringham, left in abeyance because of health problems. The reports by the Guardian and World in Action are said to have been of 'enormous significance' in producing the new national guidelines on handling informers.

Accepted by the Association of Chief Police Officers and the Home Office, they are understood to tip the balance by introducing the concept of 'proportionality' - measuring the extent of the informer's criminality against the value of his intelligence.